Creative Group brought together three behavioral experts to discuss common mistakes leaders make when it comes to incentive program design.
Sin 5: We’ll figure it out (behind the scenes) – don’t worry about being transparent
Your Inclination: I’m not sure who’s going to win but I want to ensure that my top reps get good rewards.
The Argument Against It: Without confidence in the data, rewards and incentives can become divisive.
How familiar is this: “I’ll tell you if you promise not to tell anyone else – okay?” Everything leaks. Eventually things come out and a lack of transparency will eventually become evident to those involved. So, this begs the question: why try to be covert in the first place?
No one launches a sales incentive with the intention of mucking things up, yet it happens all the time. The reasons are manifold, and the most important consideration is that the path to failure typically begins with small decisions.
Oftentimes, an executive who was not involved in the planning or design casually asks, “How are we making sure our top reps are going to win the trip?” The implication is clear that top performers need to be recognized, but the approach is misguided. That executive might be asking to ensure that high-performing reps are recognized, not merely winners in the incentive.
When Google ran Project Aristotle a few years ago, they discovered that one of the most critical factors to making successful teams was psychological safety. When employees feel like the work environment is fair, they work harder. They don’t hold back. They give it their all. That’s the point of incentive program, isn’t it: to have reps give their all?
Psychological safety is evident when employees are empowered to ask questions without fear of retribution or criticism, and they understand the rules and how they apply to everyone. (NOTE: Simply writing rules that state the conditions is one thing, having the reps understand them is quite another.) Transparency is the foundation on which all solid incentive plans are built.
When transparency fails and rumors of favors or unequal treatment emerge, emotions will get the best of reps who perceive injustice. Also, as humans, we tend to fill in missing or incomplete information with a negative assumption. The caveman who heard something in the brush and assumed it was a saber tooth tiger ran away and survived, while the caveman who assumed it was his friend stayed and died. We are hardwired to assume the negative. When we lack transparency around how the incentives work, we are inadvertently inviting people to take a negative view of the reasons why the incentive is designed the way it is. Emotions are great at generating engagement; however, emotions fueled by anger or anxiety will decrease your results.
Sales incentives are best delivered when they are designed well. Measure twice, cut once, the wise carpenters say, and that’s the case when it comes to incentive design. Begin with clear objectives and goals. Ask yourself if the rules you’re employing will accomplish the goals you’ve created. If top-performer recognition is critical, design a program that addresses it. If maximizing the sales revenue or profitability during the incentive period are most critical, design those priorities into the rules.
Better clarity surrounding objectives leads to better design.
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